Case 1:15-cv-00661-SLR Document 72 Filed 02/04/16 Page 1 of 10 PageID #: 2332
`
`IN THE UNITED STATES DISTRICT COURT
`
`FOR THE DISTRICT OF DELAWARE
`
`DNA GENOTEK INC.,
`
`Plaintiff,
`
`V.
`
`SPECTRUM DNA, SPECTRUM
`SOLUTIONS L.L.C., and SPECTRUM
`PACKAGING L.L.C.,
`
`Defendants.
`
`)
`)
`)
`)
`) Civ. No. 15-661-SLR
`)
`)
`)
`)
`)
`)
`
`MEMORANDUM
`
`At Wilmington this 4th day of February, 2016, having reviewed the papers filed in
`
`connection with the pending motions, and having heard oral argument on the same, the
`
`court issues its decision based on the reasoning that follows:
`
`1. Background. Plaintiff DNA Genotek Inc. ("DNAG") is a Canadian corporation
`
`with its principal place of business in Kanata, Ontario. DNAG is a wholly-owned
`
`subsidiary of OraSure Technologies, Inc., a Delaware corporation with its principal
`
`place of business in Bethlehem, Pennsylvania. Defendants Spectrum DNA, Spectrum
`
`Solutions L.L.C., and Spectrum Packaging L.L.C. (collectively "Spectrum") are Utah
`
`limited liability companies with their principal place of business in Draper, Utah.
`
`2. DNAG is a leading provider of products for biological sample collection, such
`
`as saliva collection devices (also referred to as saliva test kits) for DNA testing. DNAG
`
`is the owner by assignment of U.S. Patent No. 8,221,381 ("the '381 patent"), entitled
`
`

`
`Case 1:15-cv-00661-SLR Document 72 Filed 02/04/16 Page 2 of 10 PageID #: 2333
`
`"Container System for Releasably Storing a Substance," that issued July 17, 2012. On
`
`or about July 31, 2015, Spectrum launched a website offering saliva test kits to the
`
`public, which kits are accused of infringing the '381 patent in this lawsuit (hereinafter,
`
`"the accused product"). In this regard, Spectrum facilitates the production and supply of
`
`the accused product to Ancestry.com DNA, LLC ("Ancestry"), a Delaware limited liability
`
`company with its principal place of business in Provo, Utah, for sale in interstate
`
`commerce, including in Delaware. The court has subject matter jurisdiction pursuant to
`
`28 U.S.C. §§ 1331 and 1338(a). There are two pending motions at bar. DNAG has
`
`filed a motion seeking to preliminarily enjoin Spectrum's sale of the accused product.
`
`Spectrum has filed a motion to dismiss for lack of personal jurisdiction.
`
`2. Personal jurisdiction. Rule 12(b)(2) of the Federal Rules of Civil Procedure
`
`directs the court to dismiss a case when the court lacks personal jurisdiction over the
`
`defendant. Fed. R. Civ. P. 12(b)(2). When reviewing a motion to dismiss pursuant to
`
`Rule 12(b)(2), a court must accept as true all allegations of jurisdictional fact made by
`
`the plaintiff and resolve all factual disputes in the plaintiff's favor. Traynor v. Liu, 495 F.
`
`Supp. 2d 444, 448 (D. Del. 2007). Once a jurisdictional defense has been raised, the
`
`plaintiff bears the burden of establishing, with reasonable particularity, that sufficient
`
`minimum contacts have occurred between the defendant and the forum to support
`
`jurisdiction. See Provident Nat'/ Bank v. Cal. Fed. Sav. & Loan Ass'n, 819 F.2d 434,
`
`437 (3d Cir. 1987). To meet this burden, the plaintiff must produce "sworn affidavits or
`
`other competent evidence," since a Rule 12(b)(2) motion "requires resolution of factual
`
`issues outside the pleadings." Time Share Vacation Club v. Atlantic Resorts, Ltd., 735
`
`2
`
`

`
`Case 1:15-cv-00661-SLR Document 72 Filed 02/04/16 Page 3 of 10 PageID #: 2334
`
`F.2d 61, 67 n. 9 (3d Cir. 1984).
`
`3. To establish personal jurisdiction, a plaintiff must produce facts sufficient to
`
`satisfy two requirements by a preponderance of the evidence, one statutory and one
`
`constitutional. See id. at 66; Reach & Assocs. v. Oencer, 269 F. Supp. 2d 497, 502 (D.
`
`Del. 2003). With respect to the statutory requirement, the court must determine
`
`whether there is a statutory basis for jurisdiction under the forum state's long-arm
`
`statute. See Reach & Assocs., 269 F. Supp. 2d at 502. The constitutional basis
`
`requires the court to determine whether the exercise of jurisdiction comports with the
`
`defendant's right to due process. See id.; see also Int'/ Shoe Co. v. Washington, 326
`
`U.S. 310, 316 (1945).
`
`4. Pursuant to the relevant portions of Delaware's long-arm statute, 10 Del. C. §
`
`3104(c)(1)-(4), a court may exercise personal jurisdiction over a defendant when the
`
`defendant or its agent:
`
`(1) Transacts any business or performs any character of work or service in
`the State;
`
`(2) Contracts to supply services or things in this State;
`
`(3) Causes tortious injury in the State by an act or omission in this State;
`
`(4) Causes tortious injury in the State or outside of the State by an act or
`omission outside the State if the person regularly does or solicits
`business, engages in any other persistent course of conduct in the State
`or derives substantial revenue from services, or things used or consumed
`in the State.
`
`10 Del. C. § 3104(c)(1)-(4). With the exception of (c)(4), the long-arm statute requires a
`
`showing of specific jurisdiction. See Shoemaker v. McConnell, 556 F. Supp. 2d 351,
`
`354, 355 (D. Del. 2008). Subsection (4) confers general jurisdiction, which requires a
`
`3
`
`

`
`Case 1:15-cv-00661-SLR Document 72 Filed 02/04/16 Page 4 of 10 PageID #: 2335
`
`greater number of contacts, but allows the exercise of personal jurisdiction even when
`
`the claim is unrelated to the forum contacts. See Applied Biosystems, Inc. v. Cruachem,
`
`Ltd., 772 F. Supp. 1458, 1466 (D. Del. 1991).
`
`5. If defendant is found to be within the reach of the long-arm statute, the court
`
`then must analyze whether the exercise of personal jurisdiction comports with due
`
`process, to wit, whether plaintiff has demonstrated that defendant "purposefully
`
`avail[ed] itself of the privilege of conducting activities within the forum State," so that it
`
`should "reasonably anticipate being haled into court there." World-Wide Volkswagen
`
`Corp. v. Woodson, 444 U.S. 286, 297 (1980) (citations omitted). For the court to
`
`exercise specific personal jurisdiction consistent with due process, plaintiff's cause of
`
`action must have arisen from the defendant's activities in the forum State. See Burger
`
`King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985). For the court to exercise general
`
`personal jurisdiction consistent with due process, plaintiff's cause of action can be
`
`unrelated to defendant's activities in the forum State, so long as defendant has
`
`"continuous and systematic contacts with the forum state." Applied Biosystems, Inc. v.
`
`Cruachem, Ltd., 772 F. Supp. 1458, 1470 (D. Del. 1991).
`
`6. Spectrum has moved to dismiss, arguing that it has no contacts with the State
`
`of Delaware. The record discloses that Spectrum has no facilities, employees, bank
`
`accounts, or other physical presence in Delaware. Spectrum is not registered to do
`
`business in Delaware. Aside from its website, 1 available to Delaware residents via the
`
`internet, Spectrum has not shipped any product to Delaware. Nevertheless, DNAG
`
`1www.spectrum-dna.com
`
`4
`
`

`
`Case 1:15-cv-00661-SLR Document 72 Filed 02/04/16 Page 5 of 10 PageID #: 2336
`
`asserts that the exercise of personal jurisdiction over Spectrum falls within the scope of
`
`the Delaware long-arm statute under the "dual jurisdiction" or "stream of commerce"
`
`theory that implicates 10 Del. C. § (c)((1) and (c)(4).
`
`7. I have recognized the "dual jurisdiction" or "stream-of-commerce" analytical
`
`framework as a basis for personal jurisdiction under Delaware law. See Intellectual
`
`Ventures I LLC v. Ricoh Co., Ltd., 67 F. Supp. 3d 656 (D. Del. 2014); and Belden
`
`Techs., Inc. v. LS Corp., 829 F. Supp. 2d 260 (D. Del. 2010). Accord Robert Bosch
`
`LLC v. Alberee Products, Inc., 70 F. Supp. 3d 665 (D. Del. 2014). Under this theory, it
`
`is DNAG's burden to demonstrate that: (1) Spectrum has an intent to serve the
`
`Delaware market; (2) this intent results in the introduction of the accused product into
`
`Delaware; and (3) DNAG's cause of action arises from injuries caused by sale of the
`
`accused product in Delaware. See Belden, 829 F. Supp. 2d at 267-68; Bosch, 70 F.
`
`Supp. 3d at 675.
`
`8. Under the construct discussed in Boone v. Oy Partek Ab, 724 A.2d 1150,
`
`1158 (Del. Super. 1997), aff'd, 707 A.2d 765 (Del. 1998), "the touchstone of dual
`
`jurisdiction analysis is intent and purpose to serve the Delaware market." Power
`
`Integrations, Inc. v. BCD Semiconductor, 547 F. Supp.2d 365, 372 (D. Del. 2008); see
`
`Boone, 724 A.2d at 1158. In this regard, "[a] non-resident firm's intent to serve the
`
`United States market is sufficient to establish an intent to serve the Delaware market,
`
`unless there is evidence that the firm intended to exclude from its marketing and
`
`distribution efforts some portion of the country that includes Delaware." Power
`
`Integrations, Inc., 547 F. Supp. 2d at 373.
`
`5
`
`

`
`Case 1:15-cv-00661-SLR Document 72 Filed 02/04/16 Page 6 of 10 PageID #: 2337
`
`9. In addition to demonstrating that Spectrum's conduct falls within the scope of
`
`Delaware's long-arm statute, DNAG must also demonstrate that exercising personal
`
`jurisdiction over Spectrum passes constitutional muster under the Due Process Clause
`
`of the Fourteenth Amendment. For the constitutional dimension to add anything of
`
`substance to the jurisdictional inquiry, one looks to Justice O'Connor's plurality opinion
`
`in Asahi Metal Industry Co., Ltd. v. Superior Court of California, Solano County, 480
`
`U.S. 102 (1987). Rejecting the more liberal approach taken by Justice Brennan (also
`
`writing for four justices), 2 the O'Connor plurality in Asahi held that
`
`[t]he "substantial connection" ... between the defendant and the forum State
`necessary for a finding of minimum contacts must come about by an action
`of the defendant purposefully directed toward the forum State." . .. The
`placement of a product into the stream of commerce, without more, is not
`an act of the defendant purposefully directed toward the forum State.
`Additional conduct of the defendant may indicate an intent or purpose to
`serve the market in the forum State, for example, designing the product for
`the market in the forum State, advertising in the forum State, establishing
`channels for providing regular advice to customers in the forum State, or
`marketing the product through a distributor who has agreed to serve as the
`sales agent in the forum State. But a defendant's awareness that the stream
`of commerce may or will sweep the product into the forum State does not
`convert the mere act of placing the product into the stream into an act
`purposefully directed toward the forum State.
`
`Id. at 112 (emphasis in original). 3
`
`10. Analysis. The linchpin of DNAG's jurisdictional argument is that Spectrum
`
`sells the accused product to Ancestry which has nationwide sales, including in
`
`2"[J]urisdiction premised on the placement of a product into the stream of
`commerce is consistent with the Due Process Clause" for, "[a]s long as a participant in
`this process is aware that the final product is being marketed in the forum State, the
`possibility of a lawsuit there cannot come as a surprise." Asahi, 480 U.S. at 117.
`
`3The court in Boone adopted this test. 724 A.2d at 1159 and n.4.
`
`6
`
`

`
`Case 1:15-cv-00661-SLR Document 72 Filed 02/04/16 Page 7 of 10 PageID #: 2338
`
`Delaware. DNAG argues that it has adduced evidence of "additional conduct" sufficient
`
`to indicate "an intent or purpose" on the part of Spectrum "to serve the market" in
`
`Delaware. Id. The record relied on by DNAG includes the following: (1) the October
`
`2012 Manufacturing Agreement (as amended September 25, 2014) between Ancestry
`
`and Spectrum whereby Spectrum facilitates the manufacture and delivery of the
`
`accused product according to Ancestry's specifications (D.I. 31, exs. 7, 8); (2) the
`
`December 31, 2014 Purchase and Sales Commission Agreement between Ancestry
`
`and Spectrum whereby Spectrum is permitted to sell the accused product if Ancestry
`
`approves (id., ex. 9); (3) several invoices for the delivery of the accused product from
`
`Spectrum (located in Utah) to Ancestry (also located in Utah) (id., ex. 10); (4) search
`
`results demonstrating that Ancestry incorporated as a Delaware limited liability
`
`company in February 2011 (id., ex. 11 ); (5) samples of Spectrum's marketing materials
`
`wherein Spectrum describes its relationship with Ancestry as "partnering with our
`
`largest DNA gathering customer" to develop an "innovative product" by which,"[a]fter
`
`two years of development and testing," "we now have over 1 million samples tested"
`
`(id., exs. 2, 3, 5, 6); and (6) deposition excerpts from Gregg Williams, an owner of
`
`Spectrum, wherein he describes the services Spectrum provides to Ancestry
`
`("facilitat[ing] vendors that could help Ancestry" "come up with a new DNA collection
`
`device", id., ex. 1 at 151).
`
`11. As noted, there is no dispute that Ancestry specifically targets the Delaware
`
`market (see, e.g., D.I. 31, ex. 4) and sells the accused product4 to Delaware residents.
`
`4Although Spectrum's counsel argues in the briefing that Ancestry "sells a DNA
`testing service, not the accused product" (D.I. 46 at 3), that is a distinction I am not
`
`7
`
`

`
`Case 1:15-cv-00661-SLR Document 72 Filed 02/04/16 Page 8 of 10 PageID #: 2339
`
`However, there is no indication of record that Spectrum has shipped or sold any of the
`
`accused product in Delaware, 5 or that Spectrum has any control over what Ancestry
`
`does with the accused product once it is delivered to Ancestry. The agreements
`
`described above were not negotiated or executed in Delaware, nor are they governed
`
`by Delaware law. To the extent Spectrum uses the internet to advertise the accused
`
`product, a potential customer cannot place an order over the internet.
`
`(D.I. 21, 1J 16)
`
`Simply put, aside from delivering the accused product to Ancestry (outside Delaware)
`
`who, in turn, is responsible for placing the accused product into the stream of
`
`commerce, there is no persuasive evidence of "[a]dditional conduct ... [to] indicate an
`
`intent or purpose [on the part of Spectrum] to serve the market" in Delaware. Asahi,
`
`480 U.S. at 112.
`
`12. The above record is distinguishable from those cases where personal
`
`jurisdiction was found to exist. In Boone, for instance, the court exercised personal
`
`jurisdiction over a non-resident defendant ("Partek") who produced asbestos from a
`
`mine in Finland; Partek itself did not sell or distribute the asbestos to Delaware but,
`
`instead, "engaged" a third-party "to be its exclusive distributor of asbestos in the United
`
`States" and to "solicit business from the Country as a whole, including Delaware. Thus,
`
`not only did Partek anticipate that its product would be distributed to all states, including
`
`prepared to address in the context of the instant dispute.
`
`51 note, however, that Spectrum's corporate representative, Greg Williams, failed
`to do due diligence in terms of reviewing, e.g., "the reports made to Ancestry outlining
`marketing activities undertaken by Spectrum," as required under the Purchase and
`Sales Commission Agreement (D.I. 31, ex. 1 at 218), or talking to those individuals at
`Spectrum responsible for marketing and sales (see id., ex. 1 at 229-30).
`
`8
`
`

`
`Case 1:15-cv-00661-SLR Document 72 Filed 02/04/16 Page 9 of 10 PageID #: 2340
`
`Delaware, it took affirmative steps to direct its product here." 724 A.2d at 1160.
`
`Likewise, in Bosch, Chief Judge Stark found that Saver Automotive Products, Inc., a
`
`Maryland corporation, was subject to personal jurisdiction in Delaware because Saver,
`
`although it assembled components into automotive windshield wiper blades in
`
`Maryland, sold the accused wiper blades to "the nationwide reseller Costco with the
`
`expectation that Costco [would] sell the accused product in all parts of the United
`
`States, including Delaware." 70 F. Supp. 3d at 678. In contrast, I did not exercise
`
`personal jurisdiction over non-resident defendants who, e.g., transferred title to the
`
`accused products in Japan prior to importation, 6 whose website did not accommodate
`
`direct sales, 7 or whose contract with the distributor listed specific territories without
`
`mentioning Delaware or the surrounding region. 8
`
`13. The record at bar is more similar to the latter, not the former, fact patterns.
`
`The only Delaware contacts of record are those of Ancestry, and it is Ancestry who (like
`
`the asbestos producer in Boone and the wiper blade assembler in Bosch) is
`
`responsible for the distribution of the accused product into Delaware. Ultimately, it is
`
`DNAG's burden to demonstrate that the exercise of personal jurisdiction over Spectrum
`
`comports with the Due Process Clause, i.e., that Spectrum has an intent or purpose to
`
`serve the Delaware market. The record is not persuasive in this regard.
`
`14. DNAG has requested full jurisdictional discovery in the event the record is
`
`6See Intellectual Venture I LLC, 67 F. Supp. 3d at 661.
`
`7/d.
`
`8Belden, 829 F. Supp. 2d at 269-70.
`
`9
`
`

`
`Case 1:15-cv-00661-SLR Document 72 Filed 02/04/16 Page 10 of 10 PageID #: 2341
`
`found wanting. I conclude jurisdictional discovery is warranted, given the failure of
`
`Spectrum's declarant to fully explore Spectrum's marketing and sales activities, and
`
`given the business relationship between Spectrum and Ancestry.
`
`15. Conclusion. Consistent with the above, Spectrum's motion to dismiss is
`
`denied without prejudice to renew. I decline to address DNAG's motion for a
`
`preliminary injunction until jurisdiction has been established; therefore, that motion
`
`likewise is denied without prejudice to renew. An order shall issue.
`
`10